ST. PAUL, Minn. (FOX 9) – Minnesota’s jobless rate fell to 2.7 percent in February, the lowest in 23 years, boosting wage gains and contributing to concerns about persistent inflation.
The state’s worker shortage continues to worsen. Minnesota now has 2.8 job openings for every unemployed worker, Economic Development Commissioner Steve Grove told reporters at a news conference.
The labor market is tightening even as more people return to the workforce. The state’s labor force participation rate, a statistic that combines the number of employed people with those looking for work, rose to 67.9 percent in February, better than the national average but still lower than before the pandemic. of COVID-19.
“The labor force participation rate is finally on the rise, and it really seems to be across the board,” said Oriane Casale, deputy director of the Minnesota Bureau of Labor Market Information.
The state is within reach of its lowest unemployment rate on record, 2.5 percent in February 1999. Minnesota’s data goes back to 1976.
Inflation is outpacing wage gains in Minnesota and elsewhere. Year-over-year inflation was 7.9 percent in February, compared to average wage growth of 7.1 percent. In some industries where workers are in greatest demand, such as retail, hospitality and long-term care, wage growth is higher than inflation, the state economists said.
“We hear about rising wages, but also about employers trying new things: flexible work hours, childcare subsidies, paying for your parking when you arrive at the office. I’ve even heard of employers offering a pet insurance as a new benefit,” Grove said. “People are getting creative and those who are doing new things are seeing new results.”
In 2022, inflation grew faster than wages for the second time in the last decade. The only other year that happened was in 2018, according to state data. Consumers are paying higher prices for gas, groceries, home heating bills, and housing.
Last week, the Federal Reserve raised its benchmark interest rate from near zero to between 0.25 and 0.5 percent, and the Federal Reserve has planned six more rate hikes this year to rein in inflation.
It marks a significant shift from the Fed’s strategy in 2021, when economists expected inflation to be transitory as pandemic-related supply chain bottlenecks were ironed out. But the Russian invasion of Ukraine, additional waves of COVID and strong wage gains have fueled concerns that inflation will persist.
The hospitality sector is the most affected
At Olive’s Fresh Pizza Bar in Excelsior, on any given night you’ll find both managers waiting tables. Business has been very good, but keeping restaurant staff is a daily struggle.
“I’m on Zip Recruiter, I’m on Indeed, word of mouth,” said manager Tali Larson. “We even have a referral program here for our little kids.”
Unlike most Minnesota restaurants, which according to Hospitality Minnesota reported lower-than-normal revenue in the first quarter of this year, Olive’s has benefited from the convenience and popularity of pizza during the pandemic.
“There was a point where we were pushed 3, 3.5, 4 hours every night to go,” he said.
Business is going so well that they decided to open a second location in Edina. The main problem: they can’t find staff.
“There are tens of thousands who have left the industry,” said Ben Wogsland of Hospitality Minnesota. “As we move into the spring and summer months … people are very nervous that they’re not going to have the staff to meet the demand.”
Month to month, hospitality is one of the industries that has not continually increased its workforce in the last year. Wogsland reports that 32,000 employees left the industry during the pandemic and have yet to return.
“We’re really rebuilding the workforce pipeline and it’s not going to be a quick turnaround,” he said.
Larson says they typically employ high school and college students, but many haven’t returned after COVID-19.
Hospitality Minnesota is working with the legislature to create a free online hospitality training program aimed at engaging youth.
With the rush of summer ahead, Larson just hopes he can find enough people to take advantage of the crowds.
“We’ll figure it out. We always do,” he said.